I am of the firm belief that the majority of money issues aren’t really tied to income problems. Let’s say your household was average, you would make over $1,000,000 within 20 years. What are you doing with that money? Are you budgeting, saving, investing? Look at it this way:

If I gave you $1,000,000 and told you that you couldn’t work for 20 years and you could only live off of that money, would you be able to do it?

Most people would say yes, but it would actually be gone within two years. Yes, two years. As I’ve noted before, 80% of lottery winners lose all of their money within two years. The reason is simple: They do not have a plan.

See, there are really two types of people when it comes to money: savers and spenders. And if you only spend, then you are always going to have money issues, regardless of your income. You can rip off family, hit the lottery, make seven figures, and have a ton of relatives leave you money, but until you have a plan for that money (that goes beyond cars, houses, jewelry, and vacations), you will keep losing everything and repeating the cycle.

THE CYCLE

People who do not plan their income, long-term, will keep repeating the cycle. The cycle looks like this:

Paycheck to paycheck

No budget

Constantly borrowing money

Using credit cards to cover expenses you didn’t plan

High stress

No savings

No retirement

You can add in there constantly pointing the finger at other people for your problems. About 80% of those who have a net worth over seven figures started with nothing. They didn’t come from money, but they knew what they wanted, they planned, and they executed. Here’s an article from Business Insiderthat profiles 16 billionaires that came from nothing.

THE SOLUTION

I’m not big on merely focusing on “what’s wrong”, I want to talk about how to solve this issue. First and foremost, education is a big part of this. Financial literacy isn’t taught well enough in our homes or even in our schools. Between 1st grade and my Master’s degree, I’ve had one personal finance class and that was in 11th grade. We need to do a better job teaching our kids about money; and it needs to be more than fortune cookie wisdom.

The second part of this is community. We spend a lot of time in the press and in our cities talking about how external forces keep people down. They say, “If I wasn’t black…” or “If I wasn’t an immigrant...”, “…then I would succeed.” This is nothing more than a cop out. Immigrants, blacks, whites, and people of all types and backgrounds have succeeded against sizable odds and you can as well. Cultivating an environment or a narrative that is constantly against you is a mindset for losing.

Lastly, and this is really important, you need to have a plan. Many students and even adults have aspirations but if you ask them a simple question like “How are you going to do that?” they won’t have a well thought out response. If you can’t answer why you are doing something, how you are going to do it, and what it is going to look like, you will be stuck in dream land for the rest of your life. People who do well, execute, people who daydream, well, they just daydream.

PRACTICALITY

If you are struggling with money, I want to give you three things that you can do that will help you:

1. Learn about your finances.

This is Move #1 of my 9 Moves plan, but this is really important. People who struggle with money often don’t track their expenses. This is a good starting point.

2. Create a budget.

This is Move #2. 70% of adults do not have a budget which means a majority of our country is planning to fail. They don’t think long-term about money and it shows. Reading and working through Moves #1 and #2 can really help you do well.

3. Set a detailed goal.

This is not Move #3, though that would be a good next step. This is different because it’s custom to you. Pick a goal that you can accomplish in six months and nail it. Draw up a detailed plan, layout each step, and execute. If something pops up unexpectedly, navigate around it. Keep pushing towards that goal. That will get you in the habit of goal setting and help you work through the 9 Moves plan.

You got this, don’t get discouraged. If you’re still breathing, it’s still worth doing.